Friday, July 31, 2009

U.S. Free-Market Model on Trial just as Price Action has Improved, Definitely a Paradox Developing for ALL, you decide...

WASHINGTON (Dow Jones)--U.S. congressional calls for the Federal Reserve to shed more light on its lending programs have yet to ease up. On Friday, a bipartisan group of U.S. lawmakers sent a letter to Fed Chairman Ben Bernanke, urging him to release a full list of Wall Street firms that have received extraordinary aid. "It is not justifiable to have the Federal Reserve Board fail to provide this information," said the group, which includes lawmakers such as Sens. Charles Grassley, R-Iowa, Byron Dorgan, D-N.D., and Bernard Sanders, I-Vt. In the letter, the senators argued that with Goldman Sachs Group Inc. (GS) and other firms reporting large profits, there isn't more reason for the Fed to keep secret the names of financial firms that have received emergency assistance from the central bank. The senators aren't alone in their concerns about transparency at the Fed. A growing number of lawmakers, frustrated over central-bank rescues of firms such as American International Group Inc. (AIG), have criticized the central bank for being shrouded in secrecy. Earlier this month, a bipartisan group of lawmakers from the House of Representatives wrote a letter to President Barack Obama asking for an investigation of the central bank. They questioned the Fed's role in fostering Bank of America Corp.'s (BAC) acquisition of Merrill Lynch & Co., as well as the Obama administration's plans to grant the central bank new powers to oversee the U.S. financial system. Senators on Friday said they are specifically concerned about a lack of transparency surrounding the central bank's use of a special emergency authority to lend in "unusual and exigent circumstances" to address problems threatening the financial system. Amid financial panic last year, the Fed invoked the authority in an unprecedented decision to allow investment banks to access direct lending from the central bank. "In light of recent announcements by Goldman Sachs, J.P. Morgan Chase (JPM), and others that are reporting very large profits after paying back the TARP [Troubled Asset Relief Program] funds to the U.S. government, we don't believe there is now any reason for the Federal Reserve Board to refuse to share information about the companies that were helped by its activities as well as the specific amount of such help for each company," the senators wrote. They continued in the letter: "We now urge you to release the names of financial institutions that have received the emergency assistance and how much each has received. The American taxpayers' funds have been placed at risk, and we believe the American people deserve a thorough examination of the Federal Reserve Board's Wall Street bailout activities to determine how these funds were used." -By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255; Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires July 31, 2009 12:16 ET (16:16 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 16 PM EDT 07-31-09

Thursday, July 30, 2009

Private Health Insurers and Medical Professionals to get Kicked in the Teeth by Public Option, Pelosi Leads Govt Charge...

WASHINGTON (Dow Jones)--House Speaker Nancy Pelosi, D-Calif., said Thursday that insurance companies are out in full force, employing a "carpet bombing" or "shock and awe" campaign against a public option as part of sweeping health care reform. She said that the industry was attempting to rally against the proposal, some form of which is a key tenet of Democrats' health care reform plans. Speaking at a weekly press conference, likely the last before the House breaks for a month-long summer recess, Pelosi said she would have preferred a stronger public option than the one that formed part of a deal agreed to between moderate House Democrats and a key committee chairman Wednesday. "I am for the strongest possible public option," she said. Pelosi said that insurance companies won't be able to charge people seeking coverage higher premiums if they have pre-existing conditions. The legislation wouldn't allow "discrimination against people with pre-existing conditions," she said. Democrats have said their reform would end the practice of insurers denying people coverage for existing conditions. Thursday, she seemed to go one step further by saying they couldn't charge such people higher premiums either. Following the deal struck between members of the fiscally conservative "Blue Dogs" coalition and House Energy and Commerce Chairman Henry Waxman, D-Calif., Thursday, Democrats hope Waxman's panel will conclude its work on its section of the health care legislation this week. -By Corey Boles, Dow Jones Newswires; 202-862-6601; Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires July 30, 2009 11:41 ET (15:41 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 41 AM EDT 07-30-09

Wednesday, July 29, 2009

Bank Of China's Ning's Defensive Tone is Worrisome, POTC Believes It's a Mirror Image of Bernanke's Rhetoric in mid 2008, caution...

BEIJING (Dow Jones)--China's central bank will emphasize market-based systems, rather than administrative controls, in guiding the appropriate growth of credit, People's Bank of China Vice Governor Su Ning said. Su said that the PBOC will use monetary policy tools flexibly to guide credit, according to a statement issued on the Web site of the PBOC late Wednesday. It said Su made the comments at a recent meeting in Shanghai. Su said financial institutions need to work in line with the government's goal in supporting the economy and preventing financial risks. The statement came hours after a share sell-off in Chinese stocks Wednesday, in part on fears that loan growth could be slowing, sent a jolt through other regional markets from Mumbai to Sydney. Su's comments appeared to signal the PBOC wasn't about to set loan curbs in the second half of the year to cool explosive lending growth, as some market participants are fearing. In volatile trading, the Shanghai Composite Index plunged as much as 7.7% before ending down 5.0% at 3266.43, erasing most of the gains in the last five sessions. The decline is the biggest percentage drop at market close since Nov. 18, when the index ended down 6.3%. -By J.R. Wu, Dow Jones Newswires; 8610 6588-5848; Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires July 29, 2009 11:12 ET (15:12 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 12 AM EDT 07-29-09

Monday, July 27, 2009

"New Home Sales: Don't Believe the Hype"

Today we received an insightful e-mail from John K. regarding whether the economy has bottomed in Q2.
POTC does not believe the economy has bottomed in Q2, yet today's news on new home sales will fool most.
New home sales rose by 11%, and we feel this is a misrepresentation of the true underlying problem, falling sales prices.
Please read this piece and you'll see prices have plunged 12% from last year and an astounding 6% since May. That's right, 6% drop in prices in the last month alone. Are we cheering, no way:
Until sales prices stabilize, the pace of sales or even supply of homes on the market is insignificant to us. The fact prices fell 6% in the last month is very troubling. It's very likely prices will overshoot on the downside, as is the case in every panicked market, and this will be one difficult pill for the stock market to digest.
Residential real estate deleveraging is continuing, and how quickly that bleeds through to stock prices is anyone's guess. Contractors just want out at any price, and today's news makes that crystal clear.
POTC believes until the bottom in new or existing prices is marked by a couple months of massive overshoot followed by at least a year of boredom, the stock market will struggle at best. A real estate price bottom could take much longer than equity price stabilization, as real estate is Americans' largest asset class.
From a historical standpoint, stock prices fall much faster than they rise, and the recent 4 month run-up could be erased by October, especially IF home prices continue their price plummet.
Are you buying today's optimistic headlines, or are you analyzing all the intricate details. POTC recommends not buying the headline hype, as the residential real estate crisis is only attempting to reach for somekind of a bloody bottom, caution.
A good Monday is wished to all forward-thinkers, the Psychology of the Call team.

Friday, July 24, 2009

Profiling a Paradox of a liberal President, Professor, and union Police Officer, developing...

The facts: President Obama and Professor Gates = Harvard, liberal, black, pro-union.
Police Officer = white, liberal, pro-union.
The result of this emotional crisis is priceless, but especially for conservatives and independents. This type of event exposes the short-sightedness of most liberals, and be it known, these are pretty highly regarded. Every person mentioned above is and was wrong in their behavior, and thank Zeus they are all liberal and pro-union. More reason for EFCA to stall perhaps. Are police officers' significant others not in the medical field, especially nursing?
Could this seemingly tiny presidential slip of the lip bleed and contaminate health care reform? If Gates sues the Cambridge police dept and President Obama doesn't apologize. Wow, Obama could be called to testify the cop profiled and acted stupidly, what a circus. We are sure today's union police conference cannot be undone, so no apologies forthcoming.
POTC believes all parties involved here got too colorful, yet these types of events sway public opinion polls and investors. The nuances and paradoxes here are many. Could Obama's liberal fiscal agenda stall with what should have been a forgotten episode? Perhaps Obama apologizes quickly and throws another big mouthed liberal in Gates under the bus...
Wonder what side of this mess Mrs. Nancy Pelosi will take. Party at Secretary of State Hillary Rodham Clinton's house tonight no doubt, VP Joe Biden is not invited, stories developing fast....

Wednesday, July 22, 2009

The U.S. Dollar Index Holds the Key to Equity Prices

The S&P 500 index has been impressive from its March 6th lows of 666, yet it may be nothing more than a bear market chop if the index cannot eventually muster, penetrate, and close above 1,098.
Some feel this administration's policies are anti-free market, as double digit budget deficits remain untried/unproven financial experiments. Yet as we stressed in our June 25th piece, the potential collapse of the greenback may hold the key to the United States remaining King, long-term that is. Short-term suffering could be severe though.
Either Obama is for changing the economic model from free-market to a more centralized western european experience, or he is working toward a greater goal of shifting the manufacturing cost paradigm through fiscal liberal policies that will decimate the Chinese Renimbi, as deficit pressures on the greenback emerge. POTC believes slave wages in China have created a cushy U.S. consumer at the expense of a decimated U.S. manufacturing base, yet we are not convinced of Obama's aggressive policy motivations, but especially on the fiscal side, you? .
Most agree the current fiscal and monetary path will fissure the greenback's floor, yet most disagree on the time frame of this occurrence. We expect a range bound equity market, S&P 803 - 1,098, unless the greenback falls or rises unexpectedly:
1) IF the greenback penetrates above 92.08, that will be a positive for equities short and long-term.
2) IF the greenback breaks below 71.63, that will be a negative for equities short-term, but positive long-term.
Notice both outcomes end up being positive, yet the pain associated with a greenback below 71.63 will be historical, and we think lead to a Chinese Soladarity type labor revolution. The massive export driven economy of China would stumble badly, caution.
Here's to a strong U.S. dollar index, as scenario #2 looks too painful in the short-run, but especially for the Chinese people.
Thank you for your Wednesday attention. The Psychology of the Call team wishes you great peace and comfort as the week evolves~ IF you enjoyed this piece, please tell a friend or family member about our forward-thinking efforts.

Monday, July 20, 2009

China's Currency Manipulation a Thorn in Obama's Side; U.S. Fiscal Liberal Policies will cause a Labor Revolution in China as Dollar Implodes by 2012

LONDON (Dow Jones)--Global crude steel production dropped 16% on the year but rose 4.1% on the month in June to 99.8 million metric tons, as production reached a record monthly high in China, figures released by the World Steel Association showed Monday. The World Steel Association, whose members produce around 85% of the world's steel, said although production was still weak on an annual basis, "the pace of contraction showed a slow down in June" for almost all 66 countries that contributed to the report. China, the world's largest steel producing nation, increased crude steel production 6.4% on month and 6% on year to a record monthly high of 49.4 million metric tons in June. Excluding China, world crude steel production rose 1.9% on month and fell 30.2% on year as the economic downturn continued to take a bite out of demand. "We believe higher [Chinese steel] production in June is due to stronger domestic demand as a result of the country's steel-intensive stimulus plan which has led to higher steel prices in the country," analyst Michelle Applebaum of Steel Market Intelligence said in a report. But "we remain concerned that higher steel production levels combined with recently increased export tax rebate incentives will lead to still higher tonnage of Chinese steel entering the global market creating the potential for pressure on world markets," she said, noting Chinese steel exports rose 7% in June. Metal analyst Jim Lennon of Macquarie Bank said the surge in production has created a major squeeze in raw materials supply, pushing spot iron ore prices 10% above the recently negotiated annual prices agreed between suppliers and steelmakers outside China. Iron ore miners and large steelmakers around the world are starting to increase production and prices due to signs customers are placing more orders to plug gaps in inventories and in response to greater infrastructure spending stemming from government stimulus packages. But steelmakers such as ArcelorMittal (MT) have warned although demand may be technically rebounding, it isn't set to reach the record highs seen in previous years for a while longer. On a monthly basis, steel production in the European Union rose 3.5% on month to 11.2 million tons, driven by near 14% increase in Germany and an 11.5% increase in France, which more than offset declines in Spain and Italy. Production in the Commonwealth of Independent States increased 2% on month to 7.8 million tons, driven by higher output from Russian mills which offset lower output from Ukrainian mills. In the Americas, U.S. production rose 3.2% and Brazilian steel production increased 2.5%. The picture was mixed in Asia, where Japanese production rose 6.4% but South Korean output fell 5.9% during the same period. Indian production also fell 3.2% on the month in June but rose 5.7% on the year. -By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires July 20, 2009 10:30 ET (14:30 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 10 30 AM EDT 07-20-09

Tuesday, July 14, 2009

Special Crude Oil & Energy Update - An interview with CME Group's Joseph Ria

When you hear the news reporters talk about the price of crude oil in the marketplace, they're generally talking about WTI, which is West Texas Intermediate crude oil. It's a very light, sweet crude oil and the highest grade that's out there. .
Crude oil is based on and priced on the amount of sulfur that's in the oil. It makes it easier or harder to refine based on the amount of sulfur. WTI being the lightest and sweetest, is the highest priced crude oil in the marketplace..It is a benchmark delivered in Cushing, Oklahoma. .
In benchmarks for crude oil and global pricing of crude oil, WTI probably prices about 50% of the global pricing of crude oil. Brent being basically the other pricing benchmark. There's two out there, Brent being a little of a mixture of three different grades of crude oil; BF&O, Brent 40 and Ossenberg. They're all produced in the North Sea.
We urge you to visit the link below and stream your mind with complimentary trading knowledge courtesy of Joseph Ria. The link will also give you access to three more video seminars and articles, enjoy: .
From coast to coast, and border to border, the Psychology of the Call team thanks you for your loyalty and wishes you a profitable July.

Saturday, July 11, 2009

Manufacturing Cost Gaps Lead to Service Sector Economies like U.S.; Obama's Policies make Great Sense to Slay the Chinese Dragon; IF Temporary...

Here's what reported in 2007 regarding China's slave wages: "In 2004, employees in China’s urban areas were compensated at a rate of $1.19 per hour, versus those employed in town and village, at $0.45 per hour. American manufacturing workers were compensated at an average hourly rate of $22.87 during the same time frame."
We believe the Chinese govt and select private sector individuals are profiting most from slave wages, profits, and taxes. The disadvantaged Chinese laborer is forced to work for a slave wage to merely sustain his family, and feels trapped.
Perhaps as the U.S. economy erodes due to a monster govt headlock agenda, the consumer will spend less and this will reverberate through the world, but especially through China. As the Chinese economy shrinks and their synthetic banking sector is uncovered for the world to see, the Solidarity labor movement in China will be upon us. Is it not a paradox the company who put China on the retail map, WalMart, is crazy for Cap and Trade, yet is staunchly opposed to EFCA/unionization as the Chinese laborer toils for nothing? Perhaps Obama's fiscal liberal plan behind EFCA is temporary, and temporary is all it'll take for a Chinese labor revolution to ignite.
POTC is disturbed the masses in the media fail to address this social and economic issue of slave wages in China. Perhaps Obama understands this and we should only cheer and not jeer as his energy (cap and trade), health care (govt involvement), and Employee Free Choice Act (force unions on retail, paradoxically WalMart, and every other sector of the U.S. economy) become law. Reminding you that all this legislation would be temporary, and solidify Obama a one-term presidency.
Why would a forward-thinking fiscal conservative not embrace 3 more years of financial suffering through a temporary dilution of our private sector IF this leads to a Chinese labor revolution. A Chinese labor revolution would accomplish two things: 1) it would mark a new beginning for the hard working Chinese, creating a larger middle class 2) it would mark the beginning for the manufacturing cost paradigm to shift and become competitive again. Without a revival and resurgence of a manufacturing sector, POTC believes the ability for the greenback to remain the world's leading currency is miniscule.
How is the U.S. supposed to compete against wages at and below $1.00/hour? POTC's piece written June 25th, "Pres Obama's Ultimate Fiscal Policy Target in the Mayan Yr 2012 ~Manufacturing Balance~" addresses this monstrous manufacturing cost conundrum and how today's fiscal liberal policies may be the long-term solution. Perhaps free-market society's must take unorthodox measures from time to time to reinvent and strengthen their capitalistic models. Perhaps we're at the precipice of that economic evolutionary cycle today, where burning down the forest (private sector) in spite of the trees (entrepreneurs) will actually spring more life going forward. Especially if these measures change the greatest economic and social ill on the planet, China.
Great day wished to all, your comments and e-mails are always welcome. The Psychology of the Call team promises our signature weekend piece "Psychology of the Upcoming Week's Earnings and Economic Data" next week. IF you are a subscriber, please check your boxes on July 25th.

Thursday, July 9, 2009

Climate? POTC Believes it's ALL abt Destroying the Renminbi through Obama's Fiscal Liberal Policies; It's China's Slave Wages Stupid; WalMart Society~

L'AQUILA, Italy (Dow Jones)--President Barack Obama is optimistic that the world's major economies can clinch a climate-change deal by the end of the year when negotiators gather in Copenhagen to craft a replacement for the Kyoto treaty, the White House said Friday. "I do think the president believes we're making progress and I think the president believes there is a significant amount of time left for further engagement in order to close those gaps even further," White House spokesman Robert Gibbs said. Gibbs said he doesn't think the absence of Chinese President Hu Jintao, who left the summit early on Wednesday, had an influence on the climate talks. China's participation is critical to any pact on global warming. Leaders gathered this week in L'Aquila agreed to limit global warming to 2 degrees Celsius, but failed to set medium-term targets to reduce greenhouse gas emissions. The talks showed the rifts that still divide developing and developed countries on the issue. Emerging economies want developed countries to commit to more near-term goals to cut greenhouse gas and want more funds to help mitigate climate change before agreeing to cut emissions by 50% in the long term. Gibbs said differences won't be resolved overnight. "I don't think anybody came believing that a decade's worth of disagreement would be wiped away overnight," he said. "That's clearly going to take time." -By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires July 09, 2009 12:22 ET (16:22 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 22 PM EDT 07-09-09